Trinidad to Request U.S. License Extension for Shell’s Gas Project in Venezuela

Trinidad and Tobago seeks a U.S. extension for a license enabling Shell and NGC to develop the Dragon gas project in Venezuela. Originally granted in 2023, this license allows for preparations to supply Trinidad with gas from 2027. The agreement is crucial for regional energy security as both nations explore economic opportunities despite U.S. sanctions.

Trinidad and Tobago intends to request an extension from the U.S. administration regarding a license for Shell and the National Gas Company (NGC) to advance a crucial natural gas project in Venezuela. This license, originally issued in early 2023, provided an exemption from U.S. sanctions, allowing these entities to prepare for the Dragon gas project, designed to supply Trinidad with gas by approximately 2027.

The United States updated the license in 2023 to permit hard currency or in-kind payments to Venezuela and its state-owned company, PDVSA, for gas, extending its validity to October 2025. Shell and NGC require this extension in order to initiate production post-final investment decision, anticipated within this year.

The Dragon project is projected to yield an initial production rate of approximately 200 million cubic feet of gas per day. U.S. sanctions affecting Venezuela’s extensive oil and gas sector mandate compliance for Trinidad and other operators to obtain licenses, allowing them to export or remit payments to sanctioned entities, including the Venezuelan government and PDVSA.

Trinidad Prime Minister Keith Rowley has recently stated that his government will soon inform U.S. officials about the necessity of maintaining licenses that facilitate the development of Venezuelan gas resources, emphasizing regional energy security. He has refrained from providing further specifics about these discussions.

Shell and NGC have conducted thorough assessments of the Dragon field, confirming the presence of at least 4.2 trillion cubic feet of gas, as indicated by PDVSA. Shell has finalized a seabed survey to identify potential hazards and is currently determining optimal drilling locations, the pipeline route to Trinidad, and subsea connections.

The companies are collaborating with Trinidad’s Energy Minister Stuart Young and Venezuela’s Vice President Delcy Rodriguez, who have both visited the survey vessel. The NGC directed inquiries regarding the license extension to the Trinidad government, while Shell, PDVSA, and the U.S. Treasury did not respond promptly to requests for commentary.

The Dragon field, located in Venezuelan waters near the border with Trinidad, is essential for enhancing Trinidad’s liquefied natural gas and petrochemical sectors, while Venezuela seeks to generate cash flow through gas exports. Although the U.S. has issued numerous licenses, sanctions against President Nicolas Maduro’s administration have hindered revenue streams since 2019.

Maduro’s government has denounced these sanctions as illegitimate and harmful, attributing the country’s economic difficulties to such external pressures. Should contractual negotiations between Trinidad, Venezuela, and Shell succeed in aligning with recent Venezuelan gas contracts, the Dragon project could yield approximately $30 million in monthly revenue, providing Venezuela a 20% share as royalties.

“Those numbers would hardly represent a problem for the United States,” one source noted concerning potential revenue disputes. Minister Young has affirmed that the projected output from Dragon far exceeds its initial production flow, enabling Trinidad to supplement its flagship Atlantic LNG project along with the Manatee project on its side of the border.

In conclusion, Trinidad and Tobago’s initiative to seek a U.S. license extension for the Shell and NGC-operated Dragon gas project underscores the importance of this venture for achieving regional energy security and enhancing the country’s gas supply capabilities. The expected revenue generation stands to benefit both Trinidad and Venezuela significantly, despite existing U.S. sanctions. Successful negotiations and project execution may help alleviate some of the economic pressures faced by Venezuela while fulfilling Trinidad’s energy needs.

Original Source: money.usnews.com